Fifth Third Bancorp's fourth-quarter earnings fell 5.7% as revenue sank, though the regional bank reduced its loan-loss provisions and charge-offs amid a tighter lending environment.
Industry-wide, lenders have hugely benefited from improving credit quality among their borrowers. More favorable credit conditions have allowed banks to reduce funds set aside to cover potentially risky loans, a move that continues to prop up profits across the industry.
Focus more recently has turned to loan growth, a greater challenge for regional lenders like Cincinnati-based Fifth Third, as shaky economic conditions have diminished borrowing demand. Banks have felt all the more pressure to increase loans as interest rates remain near record lows, trimming the profitability of lent funds.
For the latest period, Fifth Third reported a profit of $314 million, down from $333 million a year earlier. Per-share earnings were flat at 33 cents.
Revenue, a combination of noninterest income and net interest income, shrank 6.7% to $1.47 billion. Noninterest income dropped 16% while net interest income edged up 0.2%.
Analysts polled by Thomson Reuters most recently forecast a per-share profit of 36 cents on $1.53 billion in revenue.
Loan-loss provisions, which are funds set aside for bad loans, were $55 million, down from $166 million a year earlier and $87 million in the prior quarter. Net charge-offs, or loans lenders don't expect to collect, were 2.23% of average loans, down from 2.79% and 2.44%, respectively.